Opposition to the $4.5 billion loan Egypt is seeking from the IMF is growing. But is anyone taking note – Published on Al-Ahram weekly online, by Amira Howeidy, Nov. 14, 2012.

In the heart of Cairo, only a few kilometres away from Tahrir Square, epicentre of the 18-day uprising that overthrew Hosni Mubarak in February 2011, the battle to overturn Mubarak-era policies continues 21 months after his fall. Not only is Mubarak’s legacy of corruption entrenched in the system he left behind, Egypt’s post-revolution leadership stands accused of pursuing the same policies as their predecessor.

Perhaps the starkest example of how little has changed when it comes to economic policy is the $4.5 billion loan the government of Hisham Kandil is negotiating with the International Monetary Fund (IMF). The funds, say those who support the loan, are urgently needed to offset Egypt’s growing economic crisis which has resulted in a budget deficit of LE168 billion ($28 billion). In addition, they argue, the loan will constitute a much needed nod of approval from the international community towards Egypt’s democratic transition, providing a much needed incentive for foreign investors.

An IMF delegation arrived in Egypt on 5 November for talks. Although it is not the only loan currently being discussed it is receiving the most attention because of the IMF’s history of attaching conditions to any money it provides, stipulations that invariably impact on the poorest members of society.

Critics say that in accepting a loan that comes with strings — most often the demand that austerity measures be imposed — the government will compromise the very independence for which Egyptians fought so hard, and at enormous cost, in their battle to remove the Mubarak regime. They point out that Egypt’s foreign debt already stands at $35 billion and costs $3 billion annually to service.

Negotiations over the loan, as 17 political parties and civil society groups pointed out in a joint statement issued on 12 November, are shrouded in secrecy. The statement, which took the form of an open letter to Kandil and IMF Managing Director Christine Lagarde, also pointed out that following the dissolution of the People’s Assembly in June the talks are proceeding “in the absence of an elected parliament” … //

… While proponents of the loan insist it is essential to help solve Egypt’s economic problems, critics say the problems are a result of past dependency on such borrowing.

“We’ve tried it for decades. When will we learn that it doesn’t lead to development? You might just get your bread and your gas but the quality of your life doesn’t improve.”

The government, says Hussein, is avoiding the “difficult” question — how to move from political and economic dependence to independence?
“Issues like how to produce more corn, for example”, or tackling tax avoidance by Egypt’s super-rich minority, are not being addressed. There is no evidence of any commitment to altering the system Mubarak moulded over 30 years in power.

Opposition to the loan has been simmering for the past month, though not only because Egyptians are being kept in the dark about any details. On Monday the anti-IMF loan movement’s two-hour march began at the Egyptian stock exchange in downtown Cairo and headed to the Cabinet Office off Tahrir Square. Protesters chanted: “These are the IMF conditions: hunger, humiliation and price hikes!”; “Our demands are the same: social justice, freedom and human dignity” and “We won’t be ruled by the IMF! We won’t be ruled by colonialism!”

The demonstration’s energy peaked when protesters roared “bread, freedom and dignity!”, one of the slogans of the revolution.
Opposition to the IMF loan is beginning to emerge as a political rallying call. If the anti-loan campaign succeeds, say activists, it will represent a victory for economic and political independence and a break with the Mubarak era and what it stood for.
But what are the alternatives?

“I don’t want to see more loans from Saudi Arabia or Qatar either,” says Samer Atallah, a professor of economics at the American University in Cairo.

It’s unclear how the public perceives the IMF loan debate. Monday’s demonstration was relatively small, though earlier this month a song titled Sandooqo (The Fund) went viral online. It’s a scathing attack on the IMF’s reputation for dictating policies to recipients of its loans. Singer Yasser Al-Manawehli, who first came to public attention for his political songs in the aftermath of the revolution, pokes fun at the fund for purporting to help the poor when in fact it is seeking to control their lives by obstructing self-sufficiency and economic independence.
It is equally unclear how far the government
is prepared to go in demonstrating to the IMF that it is serious about economic reform. When Masood Ahmed, the Middle East director of the IMF, said on Sunday that the government has “yet” to come up with a detailed plan for economic reform, observers interpreted this as a sign that negotiations were stalled.

Opposition to the loan is gaining momentum, says Atallah. During the past year official statements have repeatedly suggested that the loan was in the bag yet it has still to materialise. What measures the government has taken to placate the IMF — eliminating the subsidy on 95-octane gasoline which is supposed to come into effect today, proposing tax changes and allowing a slight depreciation of the Egyptian pound (from LE6 to LE6.12 per US dollar) — are essentially cosmetic, says Atallah, and carry no real “political costs”.

“The government is unwilling to adopt measures that could antagonise the public” at a time when industrial action demanding better wages and working conditions, most notably in the health and education sectors, are eroding Morsi’s popularity and that of his government.